Real Estate Tips for a First-Time Home Seller

By Elizabeth Weintraub

Homeowners don’t generally think about filling the shoes of a first-time home seller until they decide to buy a new home. Usually, the motivating factor is the need to move — due to work-related issues or the needs of a growing family — and that generally involves buying another house.

It’s when the homeowners stop to consider the move that it may dawn on them, yes, because they need to sell, they are now a first-time home seller. Selling a home is very different from buying a home. Whereas buying a home generally involves emotions and feelings, selling a home typically centers on what listing agents like to call maximizing profit potential.

Price Your Home Accurately

Price your home accurately. For this, you should enlist the help of a reputable listing agent. Don’t choose your cousin’s sister-in-law, for example, who dabbles in real estate. You’ll fare much better if you select an experienced real estate agent who sells a fair number of listings, preferably in your neighborhood.

Your agent will analyze comparable sales and prepare an estimate of value often called a CMA, for comparative market analysis. It is OK to compare the Zestimate at Zillow but note the variances your agent will point out because your listing agent should have the experience and education to provide you with a more accurate opinion of value.

Home Staging Boosts Selling Power and Appeal

Ask your agent to advise you on preparing your home for sale. Most homes show better with about half of the furniture removed. If a buyer walks in the door and wonders if anybody lives in the house, you’ve done your job correctly. Consider home staging to boost your selling power and appeal. Painting is the single most effective improvement you can make. Don’t let dings in the woodwork or scraps on the walls make your home reflect deferred maintenance.

The Best Day to List Your Home

Choose the best day to list your home. This time period will vary depending on your local community, the weather, time of year, and a host of other factors, including the state of your present real estate market. It’s not like that movie Groundhog Day. You basically get one chance to present your home in hopefully its best light the first day on the market.

Ask About Your Agent’s Standard Real Estate Commission

Ask about your agent’s standard real estate commission before you get too far down the line. If it’s reasonable, consider the big picture and benefits to you to hire this individual. Check track records for performance. Don’t expect a full-service agent to discount. Getting into a contract is only the beginning; you need to make it all the way to closing.

Your home will not sell itself, despite what you may read or hear or the propensity of real estate websites to make the process appear as easy as the click of a mouse. It’s not. You don’t know what you don’t know. To get the most money from the sale of your home, you will most likely rely on the professionals you have hired to sell your home. Do not try to pit agents against each other to compete for commission or you’ll increase the chances you’ll end up with a weasel. You don’t deserve a weasel.

Be Flexible With Home Showings

Be flexible with showings. If home showings are too much of an imposition, consider going away the first weekend your home is on the market. Yes, it can feel a bit intrusive to allow strangers to trek through your home and check out your soft-closing drawers in the kitchen. The best way to sell your home is to let a buyer inside with her buyer’s agent to tour in peace and quiet. Leave the house when buyer’s agents show up. Anything you say can and will be used against you, plus, buyer’s agents prefer to show without interference.

Host an Open House

Allow an open house if your home is conducive to an open house. Not every home is a viable candidate for an open house. If your home is located in an area close to major traffic, that is generally indicative of a reasonable expectation that the open house signs will pull in visitors. Ask your agent if she advertises the open house online. Many a home buyer has had no desire to buy a home until she spots an open house and subsequently falls in love.

Insist on Professional Photography

Of course, if you have hired a top-notch listing agent, your agent most likely already provides professional photos. It’s not enough to just get the angle right in the photo, the most popular photos are rich in color and depth, and they entice. Ask to approve the virtual tour or photo tour before it publishes.

Review Your Listing Online

Look at your home listing on various websites to make sure the information conveyed is accurate. Agents do their best to ensure accuracy, but since it is your home, you know the details better than anyone. If you spot a feature that is missing, contact your agent immediately and ask for an inclusion.

Respond Promptly to a Purchase Offer

Try to respond promptly to a purchase offer. Many offers contain a date by which the offer expires. Notwithstanding, it can drive buyers crazy if they are forced to wait for a seller to decide whether to accept their offer or to issue a counteroffer. Remember, if you are selling because you need to buy a new home, you are no different when you are a home buyer yourself.

Line Movers Up Early

Line up your movers early. If you are thinking about moving at the end of May, for example, which is the busiest time of the year for movers, you might find it is impossible to locate movers for the day you want. You can start packing before your home hits the market, which will give you a head start on the process. It will also give you peace of mind to be prepared. Selling can be stressful enough.

Source:https://www.thebalance.com

Avoid These Mistakes When Selling Your Home

By Amy Fontinelle

Selling your home—especially if you’ve never done it before—can be surprisingly time-consuming and emotionally challenging. Strangers will come into your home and poke around in your closets and cabinets. They will criticize a place that has probably become more than just four walls and a roof to you, and then, to top it all off, they will offer you less money than you think your home is worth.

With no experience and a complex, emotional transaction on your hands, it’s easy for first-time home sellers to make lots of mistakes, but with a little know-how, you can avoid many of these pitfalls altogether. Read on to find out how you can get the highest possible price for your home within a reasonable timeframe—without losing your mind. 

Mistake No.1: Being Emotionally Involved

Once you decide to sell your home, it can be helpful to start thinking of yourself as a businessperson and a home seller, rather than as the home’s owner. By looking at the transaction from a purely financial perspective, you’ll distance yourself from the emotional aspects of selling the property that you’ve undoubtedly created many memories in.

Also, try to remember how you felt when you were shopping for that home. Most buyers will also be in an emotional state. If you can remember that you are selling not just a piece of property but also an image, the American Dream and a lifestyle, you’ll be more likely to put in the extra effort of staging and perhaps some minor remodeling to get top dollar for your home. These changes in appearance will not only help the sales price but also help you create that emotional distance because the home will look less familiar.

Mistake No.2: Not Hiring an Agent

Although real estate agents command a hefty commission (usually 5 to 6% of the sale price of your home), it’s probably ill-advised to try to sell your home on your own, especially if you haven’t done it before. A good agent will help you set a fair and competitive selling price for your home that will increase your odds of a quick sale. An agent can also help tone down the emotion of the process by interacting with potential buyers so you don’t have to and by eliminating tire-kickers who only want to look at your property but have no intention of writing an offer.

An agent will also have more experience negotiating home sales than you do, potentially helping you get more money than you could on your own. Further, if any problems crop up during the process—and they commonly do—an experienced professional will be there to handle them for you. Finally, agents are familiar with all the paperwork and pitfalls involved in real estate transactions and can help make sure the process goes smoothly.

Mistake No.3: Minimizing What Agents Do

Some people do sell their homes themselves. You’ll need to do your research on recently sold properties in your area and properties currently on the market to determine an attractive selling price, keeping in mind that most home prices have an agent’s commission factored in and you may have to discount your price as a result.

You’ll be responsible for your own marketing, so you’ll want to make sure to get your home on the Multiple Listing Service (MLS) in your geographic area to reach the widest number of buyers. Also, you’ll be the one showing the house and negotiating the sale with the buyer’s agent, which can be time-consuming, stressful, and emotional for some people.

If you’re forgoing an agent, consider hiring a real estate attorney to help you with the finer points of the transaction and the escrow process. Even with attorney’s fees, though, selling a home yourself can save you thousands. If the buyer has an agent, they’ll expect to be compensated. This cost is typically covered by the seller, so you’ll still need to pay 1 to 3% of the home’s sale price to the buyer’s agent.

Mistake No.4: Setting an Unrealistic Price

Whether you’re working with an agent or going it alone, setting the right asking price is key. Remember the comparable market analysis you or your agent did when you bought your home to determine a fair offering price? Buyers will do this for your home, too, so as a seller, you should be one step ahead of them.

Absent a housing bubble, overpriced homes generally don’t sell. Don’t worry too much about setting a price that’s on the low side because, in theory, this will generate multiple offers and bid the price up to the home’s true market value. In fact, underpricing your home can be a strategy to generate extra interest in your listing and you can always refuse an offer that’s too low.

Mistake No.5: Expecting the Asking Price

Any smart buyer will negotiate, and if you want to complete the sale, you may have to play ball. Most people want to list their homes at a price that will attract buyers while still leaving some breathing room for negotiations—the opposite of the underpricing strategy described above. This can work too and will allow the buyer to feel like he or she is getting good value while allowing you to get the amount of money you need from the sale.

Of course, whether you end up with more or less than your asking price will likely depend not just on your pricing strategy but on whether you’re in a buyer’s market or a seller’s market and on how well you have staged and modernized your home.

Mistake No.6: Selling During Winter Months

Winter, especially around the holidays, is typically a slow time of year for home sales. People are busy with social engagements and the cold weather makes it more appealing just to stay home. Because fewer buyers are likely to be looking, it may take longer to sell your home, and you may not get as much money. However, you can take some consolation in knowing that while there may not be as many active buyers, there also won’t be as many competing sellers, which can work to your advantage.

Mistake No.7: Skimping on Listing Photos

So many buyers look for homes online these days, and so many of those homes have photos, that you’ll be doing yourself a real disservice if you don’t offer photos as well. At the same time, there are so many poor photos of homes for sale that if you do a good job, it will set your listing apart and help generate extra interest.

Good photos should be crisp and clear, should be taken during the day when there is plenty of natural light available, and should showcase your home’s best assets. Consider using a wide-angle lens if possible — this will allow you to give potential buyers a better idea of what entire rooms look like. Ideally, hire a professional real estate photographer to get top quality results instead of just letting your agent take snapshots on a phone. Consider adding a video tour or 360-degree view to further enhance your listing.

Mistake No.8: Not Carrying Proper Insurance

Your lender may have required you to acquire a homeowner’s insurance policy, but if not, you’ll want to make sure you’re insured in case a viewer has an accident on the premises and tries to sue you for damages. You also want to make sure there are not any obvious hazards at the property or that you take steps to mitigate them (keeping the children of potential buyers away from your pool and getting your dogs out of the house during showings, for example).

Mistake No.9: Hiding Major Problems

Any problem with the property will be uncovered during the buyer’s inspection, so there’s no use hiding it. Either fix the problem ahead of time, price the property below market value to account for the problem, or list the property at a normal price but offer the buyer a credit to fix the problem.

Realize that if you don’t fix the problem in advance, you may eliminate a fair number of buyers who want a turnkey home. Having your home inspected before listing it is a good idea if you want to avoid costly surprises once the home is under contract. Further, many states have disclosure rules. Many require sellers to disclose known problems about their home if buyers directly ask, while others decree that sellers must voluntarily disclose certain issues.

Mistake No.10: Not Preparing for the Sale 

Sellers who do not clean and stage their homes are throwing money down the drain. If you can’t afford to hire a professional, that’s okay, there are many things you can do on your own. Failing to do these things will not only reduce your sale price but may also prevent you from getting a sale at all. For example, if you haven’t attended to minor issues like a broken doorknob, a potential buyer may wonder whether the house has larger, costlier issues that haven’t been addressed either.

Have a friend or agent, someone with a fresh pair of eyes, point out areas of your home that need work. Because of your familiarity with the home, you may have become immune to its trouble spots. Decluttering, cleaning thoroughly, putting a fresh coat of paint on the walls and getting rid of any odors will also help you make a good impression on buyers.

Mistake No.11: Not Accommodating Buyers

If someone wants to view your house, you need to accommodate this person, even if it is inconvenient for you. And yes, you have to clean and tidy the house before every single visit. A buyer won’t know and care if your house was clean last week. It’s a lot of work, but stay focused on the prize.

Mistake No.12: Selling to Unqualified Buyers

It’s more than reasonable to expect a buyer to bring a pre-approval letter from a mortgage lender (or proof of funds for cash purchases) showing that he or she has the money to buy the home. Signing a contract with a buyer whose purchase of your home is contingent on the sale of his or her own property may also put you in a serious bind if you need to close by a particular date.

The Bottom Line

Even if you make none of these mistakes when selling your home, it’s best to prepare mentally and financially for less-than-ideal scenarios. The house may sit on the market for far longer than you expect, especially in a declining market. If you can’t find a buyer in time, you may end up trying to pay two mortgages, having to rent your home out until you can find a buyer, or in dire situations, in foreclosure. However, if you avoid the costly mistakes listed here, you’ll be a long way toward putting your best foot forward and achieving that seamless, lucrative sale every home seller hopes for. 

Source:https://www.investopedia.com

9 Home Inspection Tips to Get Through the ‘Deal Killer’ Phase of Selling Your House

Writer: Allison Landa

Home inspections have a reputation for being deal killers. In fact, one out of every 20 real estate transactions hits a fatal snag along the way, and nearly a third of the ones that don’t make it to closing fall apart because of issues that turned up during the inspection, according to data from the National Association of Realtors.

Although real estate is an appreciating asset, a property’s physical structure naturally deteriorates over time and requires significant upkeep. Although some problems that arise will be apparent—like a burst pipe or deep crack in the driveway—not all of the wear and tear on a home’s inner workings are visible to the naked eye.

That’s why when the time comes to sell your house, the inspection could yield surprises even if you’ve kept to a routine home maintenance schedule. It’s a nerve-wracking position to be in as a homeowner, so we’ve asked experts in the field for their top home inspection tips to help sellers prepare mentally and logistically for this step on the road to closing.

Tip #1: Trust your real estate agent to help you navigate home inspection preparations and negotiations.

After you’ve accepted an offer on your house, the buyers of the home will schedule the home inspection within about a 10-day time frame. Depending on how many times you’ve sold a house before, you may have little to no experience preparing for the home inspection and the negotiations that will follow.

Now’s the time to put your trust in your real estate agent, who, if they’re like top-selling Weston, Florida, real estate pro David Magua, have been through this time and again—approximately 391 home inspections, to be exact.

Your real estate agent should help you:

  • Understand the types of home maintenance issues that are common in your area, whether it’s signs of water leakage in a region where every home has a basement, improper electrical wiring in a neighborhood of historic homes, or pest issues in warm climates.
  • Craft a game plan for any repair requests—to think about whether you have time to hire contractors to fix issues yourself or offer repair credits in the event that problems do arise.
  • Take the pulse of your real estate market to determine how much leverage you have as the homeowner depending on if you’re in a buyer’s market or seller’s market, and how eager prospective buyers will be to snatch up your house.
  • Differentiate between minor and major home inspection findings and what constitutes grounds for negotiations (cosmetic repairs versus issues that pose a health or safety threat).

“A good listing agent’s top priority shouldn’t be to simply sell houses”, says Magua. “Yes, we’re a great concierge, but we should (also) be a wealth of information, not just in marketing the house, but in what the market does and how to get that property being marketed out of market and sold.”

Tip #2: Allow the inspector the necessary time to do their job thoroughly.

Rushing the home inspector isn’t going to do you any favors. You should expect that the process will take a minimum of 2 to 4 hours for an average home, with a general rule of an hour per 1,000 square feet. The inspection may last longer if your home is particularly old or has additional features to inspect such as a pool, shed, attic, or crawl space.

The buyer and the buyer’s agent are typically at the house during the inspection, but in most cases it’s best for the seller to leave. Have your agent communicate with the buyer’s agent about scheduling. Perhaps you can arrange for the appointment to be while you’re at work or can get everyone (including the kids) out of the house for a few hours. If you want to be present for the inspection, talk to your agent about the pros and cons. Be aware that being there may make the buyer uncomfortable.

Tip #3: Don’t leave pets behind to “help” during the inspection.

Make sure that all pets are out of the house during the time of the home inspection. Your aged Golden Retriever may be as sweet as pie, but the inspector needs the space to do the most thorough job possible. Putting pets in a kennel or bedroom and closing the door isn’t enough—they need to be completely out of the house for the duration of the inspection.

Tip #4: Leave the house in fully operational condition for the inspection.

Make sure that all utilities—gas, water, and electricity—are on, and provide the remote controls for any associated equipment such as lights or ceiling fans. This is particularly important when you’re selling a vacant home or if you’ve already moved out of the property. The inspector will want to make sure that all appliances function properly and the utilities must be on for this to happen! All this will make it much easier for the inspector to do their job as quickly and thoroughly as possible.

Tip #5: Declutter to give the inspector clear access to where they need to be.

Frank Lesh, executive director of the American Society of Home Inspectors, points to clutter as a primary barrier between your home and an inspector’s ability to examine it.

“When things are piled up, it’s hard to see areas that the inspector needs to get to,” says Lesh. “If there’s something blocking, say, the electrical panel, like a china cabinet or a washing machine, we can’t move that stuff.”

In order to get to what inspectors call readily accessible areas—and to complete what the National Association of Home Inspectors says is a 1,600-item checklist —the inspectors first need to be able to get to those areas. “We have to be able to get the areas we need to inspect. If we can’t find it, we can’t inspect it,” Lesh said. “That’s never good because it leaves a bad feeling on the buyer’s part.”

Lesh estimated that limited access to key spaces happens “fairly often,” as frequently as one out of every five inspections. Sometimes that means the inspector can’t assess basement walls when they are blocked by stored items and stacked boxes; other times clutter prevents inspectors from accessing the home’s foundation.

Whatever the situation, the fact is that if the things that are stacked and packed in your home are keeping inspectors from doing their jobs, that’s not going to reflect well in their home inspection report.

Tip #6: Get familiar with the types of things home inspectors look for—and mentally prepare for a laundry list of issues.

Home inspection reports, which document the home inspector’s findings, are long and detailed—and (if you get your hands on a copy as the seller) will likely make you feel like your house is falling apart. The reality is many of the things on the report won’t ruffle any feathers—like cobwebs in the crawl space. The things that you should be prepared to remedy or negotiate on are the big ticket items that pose a safety or health issue or constitute a building code violation.

Review our complete guide on what home inspectors look for, which at a high level includes:

  • Signs of water damage
  • Issues that threaten the home’s structural integrity
  • Damage to the roof
  • Problems with the home’s electrical system such as faulty wiring
  • Plumbing issues whether it be corroded or leaking pipes
  • HVAC age and functionality

Tip #7: Weigh the pros and cons of a pre-inspection.

A pre-inspection is a home inspection arranged for by the seller before listing the house for sale.

The pre-inspection allows the seller to fix-up issues that would come up in the buyer’s inspection at closing, putting them in a position of strength during negotiations. “If you can solve a lot of the inspection negotiation up front, it just solves a whole gamut of problems,” Magua said.

“Don’t wait. You need to start addressing possible issues (early). … I actually send out my inspectors and do a pre-inspection prior to us even getting a contract.”

The things that sellers often get ahead on the pre-inspection include corroded plumbing—a major issue for older homes in the U.S.—as well as the use of polybutylene piping in homes built between 1992 and 1998. While this material was popular at the time of construction, it is now believed to react poorly with oxidants in the public water supply, resulting in flaking, scaling, brittleness, and the eventual failure of the pipes.

Magua estimated that the polybutylene problem arises in 10% of the transactions that make up his client load, which in turns affects the buyer’s ability to obtain home insurance as well as the overall salability of the property.

“So we make them aware of these things (through a pre-inspection) so that they don’t become issues,” he said, adding that any work that is done prior to the final inspection must be well permitted and documented to allay buyer fears.

However, there are also drawbacks that come along with a pre-inspection. First, they can open up a Pandora’s Box of problems and potentially cause you to spend money on things buyers would have let go. Keep in mind that if you do get a pre-inspection, you are legally required to disclose these results to your buyer’s agent.

Lack of standardization is also an issue here—one inspector may find things that another inspector might not and the remedies offered are also not standard. There’s no way to tell if your pre-inspection will uncover the same things as an inspection later down the road, or if it will uncover more issues than a later inspection might find.

If you do decide on a pre-inspection, make sure you leave out a copy during open houses so that buyers can see you’ve done your due diligence in finding issues. Also, only do a pre-inspection if you’re willing to fix what an inspector finds, you don’t want to uncover issues only to place them in a buyer’s lap.

The cost of a pre-inspection is also covered by a seller, whereas the buyer’s inspection is the responsibility of the buyer. The national average cost of a home inspection is $315, though fees can range depending on home’s location and size, among other factors.

Tip #8: Understand how prior remodeling may affect the inspection.

Unfortunately, not everything that is revealed during a pre-inspection is easily fixed. This applies to prior work that has been done on the property.

“Sometimes everything will be accessible, but someone comes and remodels,” Magua said, adding that basements can be particularly problematic. “They’ll put in some paneling or something, but we need to remove the front cover … and if they framed around it, where you could open the door to check the circuit breakers, that’s okay for the homeowner, but not for the inspector.”

Lesh added that when these issues arise, they are not the fault of the seller, but the seller will need to deal with it nevertheless.

“That happens a lot,” Lesh said. “It’s the guy who did the remodeling, but they don’t look at it that way. They do it and they’re gone. … Nobody’s going to know until the inspector gets there, and if the inspector has to come back, there’s going to be a second charge.”

Tip #9: Don’t try to conceal known issues.

Seller resistance can be an issue when it comes to finding and fixing potential problems prior to a home inspection. “We’ve got guys who maintain things very well. Everything looks perfect,” Magua said. “They think their home is perfect and then there are things that come up.”

Instead, he said, it’s better to face facts and deal with known issues before they are uncovered by a professional home inspector. This is especially important in a balanced or buyer’s market. Instead of jumping at the first opportunity to purchase a property, Magua is seeing buyers paying for multiple inspections at different homes—and if the seller refuses to negotiate, the buyers move on.

In the interim, Lesh said, proper maintenance on a home before it even goes on the market is one of the best ways to prevent snags come inspection time. Primary amongst routine maintenance is changing the furnace filter, cleaning gutters, and making sure that the downspouts that come from the gutters extend away from the home.

“Maintenance of a home is really important,” he said. “And unfortunately, a home does not have a check-engine light. It has to be checked and conscientious things have to be done.”

Source: https://www.homelight.com

8 Top Home Selling Mistakes You Should Avoid

Written by Gina DeMillo Wagner

Half the battle of selling a home is anticipating problems before they come up. Selling a home is a major life milestone, and it can be complex when you consider all of the steps involved: preparing and listing; making repairs; finding a buyer; navigating the closing process; and finally moving into your next place.

The consequences of a mistake can impact your finances and most importantly, your peace-of-mind. Opendoor buys and sells thousands of homes per month, providing sellers an alternative to the stress and uncertainty of a traditional sale. We understand the challenges many of our customers face, especially in slower markets.

These are some of the most common mistakes you should avoid when selling a home:

1. Underestimating the costs of selling

The total cost to sell a home can amount to much more than the 5-6% in agent commissions most people expect to pay. When you account for closing costs, repairs, and other concessions to the buyer, the costs of selling can be closer to 10% of the sale price.

For example, if you move into your new home before selling your old one, you may have to rent a temporary place or pay for both mortgages as well as other carrying costs, such as utilities, HOA dues, taxes, and storage. Learn more about trading-in your home to avoid these costs.

You can use our home sale calculator to estimate your net proceeds; the amount of money you’ll pocket after selling costs are accounted for. Knowing this information before listing can help you choose the best way to sell and give you a better idea of how much you’ll have to spend on your next house.

2. Setting an unrealistic price

The price you want and what the market will pay can be two very different things. You might hear the term Fair Market Value, which refers to how a home is valued when both the buyer and seller are reasonably knowledgeable about the property and neither is under any pressure to buy or sell.

For the seller, it’s the sweet spot between asking too much or too little. If you can’t hit the sweet spot, you risk leaving money on the table or having your home sit on the market for a longer period of time, which can have consequences.

You may have a general idea of how much your home could be worth based on homes with similar sizes and features that have sold near you. These comparable sales, also referred to as “comps”, are what many real estate agents use to suggest a listing price. The challenge is that no two comps are the same so you’d need to account for each difference between home features to be accurate. This is often called making adjustments, and it’s incredibly hard to do manually.

We use a robust valuation model to compare individual features for hundreds of pairs of comparable homes. This allows us to make a competitive offer based on market data, as well as inputs from sellers themselves.

3. Only considering the highest offer

The highest offer, while exciting, isn’t always the best offer given your needs. It’s common in many traditional sales to have contingencies. These are conditions that must be satisfied for the sale to close. You may have contingencies that protect the buyer’s interests like a financing contingency or an inspection contingency.

It’s important to be aware of these types of contingencies because they can impact the timeline of the sale, the certainty of the sale, and the complexity. For example, you may receive a really high offer that is contingent on the buyer selling their existing house.

You’d have to consider how the added timing and uncertainty compares to a slightly lower offer without that contingency. In another scenario, you may have a buyer who is willing to be more flexible on repairs versus another who is offering a higher price but asking for repair credits. Here’s more insight into how to choose the best offer.

4. Ignoring major repairs and making costly renovations

A long list of maintenance issues can turn buyers off and potentially decrease the value of your home. More importantly, buyers expect the condition of your home to match the description. Consider prioritizing the most glaring issues, particularly those that are likely to turn up during a home inspection—many buyers will require an inspection before closing.

When we conduct home assessments, we look for items that are broken, in poor condition, or can affect the safety, structure, or functionality of the home. These are some of the most common repairs items we find. If you’re preparing your home for sale, use our home maintenance and repair checklist as you inspect each space.

Many sellers also consider making renovations or improvements to increase their home’s value. Renovations can be costly, and you won’t always recover the cost in the purchase price. Furthermore, some buyers prefer to make their own renovations to personalize the space. Be sure to carefully consider any renovations if your goal is to add to the home’s value.

5. Not preparing your home for sale

One of the challenges of listing your home on the market is showing your home to prospective buyers. Generally speaking, the cleaner, less cluttered, and more well-decorated your home is, the more appeal it can have. Moving.com suggests that clutter can make your home appear smaller and make it more difficult for buyers to picture themselves living in your home. In fact, staged homes sell 88% faster and for 20% more than those that aren’t staged, according to Realtor.com.

Don’t forget about curb appeal. As Moving.com puts it, “Your home’s exterior is like the cover of a book, setting the stage for what’s inside.” If a home is disorganized or appears in disrepair, buyers may be more skeptical about its condition when they’re considering an offer.

10 Tips For First Time Home Buyers

1. Pay Off All Debt and Build an Emergency Fund

Owning a home is expensive—much more expensive than renting, even if your monthly house payment will be similar or cheaper than your current rent amount. That’s because when you own a home, you’re responsible for all the maintenance and upkeep costs. And those can add up fast! So, before you even think about buying your first home, make sure you’re debt-free and have an emergency fund of three to six months of expenses in place.

When you get into a home with no payments (besides the mortgage) and have a nice big emergency fund, you’ll have the cash to pay for huge expenses that suddenly come your way. You’ll be able to love the life you’ve set up for yourself because stress and worry won’t be part of the equation!

Now, once you’re debt-free, I want you to stay debt-free. So, as you’re shopping for your first home and getting excited about decorating and filling it with new furniture, be mindful of your budget.

The spender in me knows that’s easier said than done. When my husband, Winston, and I moved into our first home, I had so many visions for what our home could look like! It was hard for me to accept the fact that I could only decorate one room at a time. But I knew our future money goals were more important than me spending all our savings at the furniture and home stores.

You might have some empty rooms for a little while, but your budget and your future self will thank you! And if you find yourself thinking, Oh well, I’ll just put it on credit—stop right there! Debt is dumb. Plus, taking on new debt in the middle of buying a house could delay your approval for a mortgage and make you miss out on the perfect home. Don’t do it!

2. Determine How Much House You Can Afford

Before you get emotionally attached to a beautiful house, check your monthly budget to determine how much house you can afford. You need to leave room in your budget for other things, so make sure your monthly housing costs (including HOA fees, taxes, insurance, etc.) are going to be no more than 25% of your monthly take-home pay.

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For example, let’s say you bring home $5,000 a month. Multiply that by 25% to establish your maximum monthly house payment of $1,250. Based on a 15-year mortgage with a 4% fixed interest rate, here are the home options you can afford (not including taxes and insurance):

  • $187,767 home with a 10% down payment ($18,777)
  • $211,238 home with a 20% down payment ($42,248)
  • $241,415 home with a 30% down payment ($72,424)
  • $281,650 home with a 40% down payment ($112,660)

That’s an easy way to find a number in your ballpark. But don’t forget that property taxes and homeowner’s insurance will affect your monthly payment. You’ll also need to factor those numbers in before settling on a maximum home price.

If you use the above example and enter $211,238 into our mortgage calculator, you’ll find that your maximum monthly payment of $1,250 increases to $1,515 when you add in $194 for taxes and $71 for insurance. To drop that number back down to your monthly housing budget of $1,250, you’ll have to lower the price of the house you can afford to $172,600.

Since property tax rates and the cost of homeowner’s insurance vary, check with your real estate agent and insurance company for estimates to calculate how much house you can afford.

3. Save a Down Payment

If saving up to pay cash for the total price of a house isn’t reasonable for your family’s timeline, at least save for a down payment of 20% or more. Then you won’t have to pay for private mortgage insurance (PMI), which protects the mortgage company in case you can’t make your payments and end up in foreclosure. PMI usually costs 1% of the total loan value, and it’s added to your monthly payment.

If a 20% down payment seems out of reach for you, first-time home buyer programs that offer single-digit down payments may sound tempting. But don’t use them! These options will cost you more in the long run. Here are some low-to-no down payment mortgage options to avoid:

  • Adjustable-Rate Mortgages (ARMs): ARMs might seem great with a low initial interest rate, but they allow lenders to adjust the rate to transfer the risk of rising interest rates (and monthly payments) to you.
  • FHA Loans: You may be able to get an FHA mortgage with as little as 3.5% down, but you have to pay a mortgage insurance premium (similar to PMI) for the life of the loan. That’s thousands of dollars that won’t go toward paying off your mortgage.
  • VA Loans: VA loans allow veterans to buy a home with no down payment. But if the real estate market shifts, you could easily owe more than the market value of your home. These loans also carry a bunch of fees and usually charge interest rates that are higher than those for conventional loans.

I only recommend a 15-year, fixed-rate conventional mortgage with a 20% down payment. Here are the reasons why:

  • A 15-year term creates a higher monthly payment, but you’ll pay off your mortgage in half the time, have a lower interest rate, and save thousands of dollars in interest.
  • A fixed-rate conventional loan keeps your interest rate the same for the life of the loan, which protects you from the increasing expenses of rising rates.

Please don’t get a 30-year mortgage because of the lower monthly payment. When you look at the math on a 15-year versus a 30-year, you’ll realize you pay a whole lot more money on a 30-year mortgage in the long run!

Let’s say you put a 20% down payment ($34,520) on a $172,600 home. Your monthly payment for a 15-year, fixed-rate mortgage at 4% would be $1,250. If you add up the interest you’ll pay over the 15 years, it’ll total $45,765.

15-year fixed-rate mortgage at 4% interest on a $172,600 home = $45,765

But maybe you didn’t want to pay that much every month and instead went with a 30-year fixed-rate mortgage at 4% to lower your monthly payment to $888. After 30 years, you’ll have paid $99,236 in interest—which makes it $53,471 more than the 15-year mortgage! And, you’ll be in debt 15 years longer!

30-year fixed-rate mortgage at 4% interest on a $172,600 home = $99,236

4. Save for Closing Costs

Along with your down payment, you’ll also need to pay for closing costs. If you’re a first-time home buyer, you may be wondering how much it costs to close on a house. On average, closing costs are about 3–4% of the purchase price of your home.2 Your lender will give you a specific number so you know exactly what to bring on closing day. These fees pay for important steps in the home-buying process, including:

  • Appraisal
  • Home inspection
  • Credit report
  • Attorney
  • Homeowner’s insurance

Let’s see how this plays out with our example of a $172,600 home. If you multiply $172,600 by the higher 4% closing cost average, you’ll find that you need $6,904 for closing costs. Now, let’s add that to your 20% down payment of $34,520. Together, the two equal $41,424, which is about what you’ll need to save to pay for the down payment and the closing costs on your first house.

$172,600 x 4% = $6,904
$6,904 + $34,520 = $41,424

You want to save for your closing costs and down payment as quickly as possible—with the same amount of intensity I tell people to use when they’re getting out of debt and building a full emergency fund. In fact, it’s okay to put retirement savings on hold for a short period of time to save for a home—but you’ve got to hustle!

Pick up a second job, sell whatever isn’t nailed down, move into a smaller space, add a roommate and charge rent—do whatever you need to do to save for your closing costs and down payment as fast as you can.

5. Get Preapproved for a Loan

Once you’re confident you have enough cash saved to pay for closing costs and 20% of your home, you’re ready to handle the other 80% by talking to a mortgage lender.

Get pre-qualified for a loan and take the extra time to get a preapproval letter before you start your home search. Preapproval shows sellers that you’re a serious buyer, which is a great way for first-time home buyers to get ahead in a competitive market.

To get preapproved, your lender will need to verify your financial information (proof of income, taxes, etc.) and submit your loan for preliminary underwriting. If you live a debt-free lifestyle like I teach, you may need to find a lender who believes in debt-free homeownership and will work with first-time home buyers who have no credit score.

6. Find a Home for Sale in Your Price Range

According to recent data reported by the National Association of Realtors (NAR), most buyers either found the home they purchased online (50%) or through a real estate agent (28%).3 Doing both sets you up for success!

Find homes you like online and send them to your real estate agent so they have a good idea of what you’re looking for. Then they can use a multiple listing service (MLS) to find homes that meet your criteria in your desired areas.

An MLS is created, maintained, and paid for by real estate professionals and it can really help first-time home buyers like you to view the largest pool of properties for sale in the marketplace. Real estate agents also provide valuable market expertise and can help you find great deals on homes as soon as (or before) they’re listed.

7. Research Neighborhoods for Best Fit

After you’ve found some homes for sale in your price range, be careful not to make a decision based on the property alone. According to a NAR survey, home buyers are more willing to compromise on a home’s condition (20%) and size (17%) than on the quality of its neighborhood (6%) and distance from a school (2%).4 So make sure you factor neighborhood quality and location into your decision.

Ask your real estate agent for information on crime rates and the quality of schools around your prospective neighborhoods. Calculate your new commute times to see if they seem manageable. Visit the neighborhood at different times and days to check for traffic conditions and noise levels and to see if people are comfortable being outdoors. Only choose a neighborhood that you and your family feel good about.

8. Attend Open Houses and Think Long Term

Once you’ve narrowed down the neighborhoods, attend a few open houses. Looking at homes that are for sale—even if they’re not a perfect fit for you—is a great way to learn more about the area. When you do eventually find a house you love, you’ll know how your place compares to better or worse homes in that neighborhood.

When it comes to buying, a good strategy is to find the most affordable house in the best neighborhood. If you buy at the bottom of the price range in a good neighborhood, you’ll have more room to build home value.

For instance, let’s say you find a home that’s the only one on the block without wood floors and granite countertops. If you have the cash to make those upgrades, you’ll be able to add instant value to your home!

9. Make a Competitive Offer (That’s Within Your Budget!)

Let’s say you found the home you want and can afford. Since you’re already preapproved for a loan, you’re ready to make an offer. If you’re a first-time home buyer, it may be hard to know how much you should offer. That’s when you can rely on the expertise of your real estate agent.

Ask your agent to help you make sure your offer is competitive but also within your budget and the home’s value. Be careful not to make an impulsive offer that’s higher than you can afford just to knock out the competition. A personalized letter might help your offer stand out among multiple bids in a hot market.

10. Prepare for Closing

Once a seller accepts your offer, the closing process will begin. Keep things running smoothly by knowing what to expect when closing on a house. The average closing process takes 43 days, which gives you plenty of time to tackle closing items.5 A real estate agent will schedule the remaining steps from home inspection to final walkthrough, and they’ll keep you informed about any roadblocks.

As you prepare for closing, make sure you read every document and ask your real estate agent to explain anything you don’t understand—especially before you sign the official contract for the home transaction. It’ll be your signature on the documents, so you’ll be the one responsible for anything you sign.

Source: https://www.daveramsey.com

13 Biggest Mistakes By Home Buyers – According To Real Estate Agents

1. Assuming every home’s price is negotiable.

“Sellers use different strategies when pricing their home,” Barnett said. “Sometimes it is priced with room for negotiations, but other times it’s priced to get multiple offers, potentially going over the asking price.”

Barnett said it’s not uncommon for a buyer to lose the first couple of properties they make an offer on because they’ve underbid when the home is priced to sell.

2. Getting distracted by the “flashy” details and ignoring the actual quality of a home.

“It’s important not to be seduced by the icing on the cake,” Brian K. Lewis of Compass, who sells $2 million to $10 million homes in New York City, told Business Insider. “Ignore the icing and focus on the substance of a home — the quality of the construction and the level of finish.”

Buyers should pay attention to the lot and/or the building and thoroughly inspect the property, he said.

“Many homes can be ‘botoxed’ to look pretty on the outside,” Lewis said. “Focus on the bones and structure — a deep dive will reveal the truth.”  

David Tortolini agreed that many buyers pay too much attention to superficial factors. 

“They focus too much on flashy things, like granite counters and stainless steel appliances, that often have many other problems or are in a bad location, and bypass homes that have been very well taken care of and are in a great location but aren’t updated,” Tortolini said.

3. Not putting down the largest down payment possible.

Alan Hedrick of Compass, who deals with homes in the $2.5 million range, said one of the biggest mistakes a home buyer can make is not putting down a large enough down payment.

“Putting a larger down payment could significantly reduce your monthly spending on your mortgage,” Hedrick said. “It’s okay to ask for outside help, like a gift for a down payment if it will help you obtain homeownership faster.”

4. Making a lowball offer.

According to Tim Swearingen of Coldwell Banker Bain in Washington and Oregon, who works with homes priced at $1.2 million on average, one big mistake is “offending the seller with lowball offers — let the brokers gauge the clients informally with each other,” he said. “We are paid to negotiate and have a fiduciary duty to our clients. Let us work.”

Michael K. Davis, an agent at Compass who deals with homes at an average price of $1.6 million in New York City, said many buyers think they can simply make all-cash lowball offers and they’ll be accepted.

“While cash is king, it doesn’t always get deals done,” Davis said.

5. Limiting your search to a specific style of home.

Dana Bartel, an agent at Compass who works in the Hamptons with homes that cost an average of $1.5 million, said too many buyers limit their focus to a certain style of house.

“A home is where you make it and if it works for your lifestyle,” Bartel said. “Not necessarily what it looks like on the outside.”

6. Not thinking about selling the home one day.

Buyers often forget that they’ll most likely sell their home at some point, according to Gerard Marino, who does sales in the $300,000 to $500,000 range in southwest Florida.

“They forget that eventually they will need to sell,” Marino said. “Most everything can be fixed but location, location, location can’t be fixed. Buy location, NOT price. “

7. Trying to buy without a broker.

Gill Chowdhury of Warburg Realty, who sells homes for an average of $2 million in Manhattan, says one major mistake is when a buyer tries to buy a home directly without a broker.

“I don’t care how good you are at math, how crazy your excel skills are, there are too many intangibles that you won’t be able to calculate for and you’ll make a mistake,” Chowdhury said. “For what? The theoretical savings of 1% or 2%. You’re kidding yourself.”

Buyers are “leaving money on the table” if they don’t let a good broker represent them, says Martin Eiden, who sells homes in Manhattan and Brooklyn for between $700,000 and $7 million.

“Buyers who come direct, without a broker, always overpay,” Eiden said.

8. Overlooking important details like the condition of the roof or hot water tank.

“Buyers go with what they feel and many times ignore the ‘important’ details in a home such as: is the electric up to code? If it isn’t, not only is it a fire hazard, but it is costly to update,” Noemi Bitterman of Warburg Realty, who deals with homes in Manhattan and Brooklyn with prices between $500,000 and $1.75 million, told Business Insider.

Other important considerations include the condition of the roof, the hot water tank, and the boiler, Bitterman said.

9. Passing on a great home early in the search because you think you’ll find something better.

“Some clients pass over ideal properties early on in the search in the hope that they’ll find something better,” Lisa Camillieri of Warburg, who sells homes in Manhattan and Brooklyn in the $400,000 to $1.2 million range, said. “This strategy almost never works.”

Butch Haze, who sells homes between $3 million and $10 million in the San Francisco area, said many first-time buyers see the best home first.

“They will pass it up because they saw it too early in their search process and they will spend years looking for that one perfect house they wish they made the offer on,” Haze said. “Now the market has moved on them and they are paying more for less which no one likes to do.”

Buyers should trust their instincts, even if they find something they love right off the bat, he said.

“Love is hard to find and should be cherished when it happens,” Haze said.

10. Not seeing the true potential of a home.

Marilyn Blume of Warburg Realty, who sells $2 million to $3 million homes in New York City, said many buyers don’t look at the “bones and potential” of a home and instead get “distracted by something immaterial such as bright red walls or ugly kitchen cabinets.”

11. Holding out for the “perfect” home.

“At least in NYC, waiting too long to move forward on an apartment they love” is a big mistake, said Michael Bello of REAL New York, who does $5,000-per-month on average rentals in the city.

“The ‘perfect apartment’ doesn’t exist here,” Bello said. “If you find a place that checks seven of the 10 boxes you’re looking for, you should take it. ‘I love it, but I’m going to keep looking’ = you’re going to lose out on the apartment you love and then regret delaying later on.”

12. Focusing too much on online listings.

Another common mistake is becoming obsessed with “that ‘one listing’ they found on the internet,” Scot Dalbery of REAL New York, who deals with rental properties in New York City that are $4,000 a month on average, told Business Insider.

“So many clients are adamant about only seeing the one listing they found online in their own research, that they don’t realize there are other, often better, options out there,” Dalbery said, adding that online listings often portray an artificial picture of a home.

“So people often become disappointed when finally seeing that dream listing in-person and become discouraged,” he said. “That’s where I step in to ensure them that we will find something even better as long as they trust me to take the reins.”

13. Buying a home you’re hesitant about.

Robin Kencel of The Robin Kencel Group at Compass in Connecticut, who sells homes between $500,000 and $28 million, said one mistake often emerges over time, after a buyer has been living in the home. 

“Overall, I would say, if you have any doubts, second guesses or are spending more time worrying about some aspect of the purchase, rather than being excited about it, then it’s not the right home for you and it’s probably best to walk away from it,” Kencel said. “If I sense any of these things from my buyers, I have a heart to heart with them to make sure that they are wholly confident in their decision.”

Source: https://www.businessinsider.com